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Life insurance with income protection

Life insurance with income protection

26 May 2021

It’s no secret that a life insurance policy can buy you and your loved ones a lot of peace of mind. But sometimes a life insurance policy might not feel like enough. Sure, your family is protected if you pass away, but what if something happens whilst you’re still alive that threatens your financial security? 

This is where multiple policies can swoop in and save the day. Combining life insurance and income protection can cover you from every angle - but how does this work? 

Life insurance explained

Life insurance can be an intimidating thing to sort out for you and your family. The stakes are higher than insuring your car or your laptop, as your family’s quality of life is what you’re protecting. With so many different insurance products to consider, it can seem difficult to know where to start. 

So let’s start with life insurance! It’s designed to pay out a tax free lump sum to your loved ones when you die. This money helps your family stay financially secure when you’re not around to provide for them. This is why life insurance is so worth taking the time to carefully consider. It buys your loved one’s security. You’re paying to ensure that financial troubles won’t be added to their stress in an already difficult situation. 

Life insurance might be an extra spend, but the reality is that life insurance can be much more affordable and easy to manage when bought wisely. The price will be dependant upon variables like:

  • how much you want to be covered for
  • how long you want to be covered for
  • the state of your health
  • your lifestyle, hobbies, and job
  • your age
  • your smoking status
  • how much you drink

You will pay monthly premiums until either you pass away or your policy ends. When you buy your policy, you’ll decide when you want it to end. You can either buy term life insurance (which will end on the pre-agreed date) or whole of life insurance (which will not end until you pass away). When buying your insurance, it’s important to consider if you’re buying it in order to cover certain big costs (like your mortgage, or childcare costs) or to ensure a certain quality of life for your family no matter when you pass away. If it’s the former, term life insurance - usually the cheaper option - may work best for you. For more advice on choosing the right policy for you, get in touch with a life insurance broker, like us here at LifeSearch

Whilst life insurance only pays out if you die, there are other types of insurance available that can cover you if you’re still knocking around but aren’t able to provide financially - such as income protection insurance.

What is income protection?

You’re much more likely to fall ill or be injured during the time you’re paying off your mortgage or raising kids than you are to die. What happens then, if you can’t work? Your life insurance policy won’t help you, and you’ll be living on sick pay - or down one whole salary entirely. This is where income protection insurance comes in. 

Income protection is there to pay out in case something happens to you and you’re unable to work. It pays out  monthly instalments, usually between 50% and 70% of your salary, until 1 of 4 things happen:

  1. You recover and go back to work. 
  2. You reach the state pension age and retire.
  3. Your policy ends.
  4. You pass away during the period of the claim. 

When it comes to cost, income protection is similarly dependent on your lifestyle, age, job, hobbies, health, and the length of time you want to be covered for. You’ll also need to decide on a “deferral period”, which refers to how long it’ll take between you making the claim and beginning to receive your pay out. 

The longer your deferral period is, the cheaper your premiums will be. Before buying your policy, you should figure out how much Statutory Sick Pay (SSP) you’re eligible for from your current job and work out how long you could get by on just that pay and/or your savings. Then you can arrange your insurance payout to start at the point that you think you’d need it. 

Can I get life insurance and income protection?

Income Protection can go hand in hand with your life insurance policy to cover you from all angles. If you’re curious about both, the good news is that you can cover yourself for both eventualities. Here at LifeSearch, we can help you find coverage suited for your needs for both Life Insurance and Income Protection.

Contact us for advice tailored to your situation - our friendly and experienced team wants to protect as many families as possible, and we’ll do our best to help you find the life insurance solution for you.

Let us get to know you and do the hard work for you

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LifeSearch Limited is an Appointed Representative of LifeSearch Partners Limited, who are authorised and regulated by the Financial Conduct Authority. Calls may be monitored/recorded.